Michigan Senator Proposes Cigar Tax Increase

While one bill in the Michigan Legislature is looking to permanently extend the 50-cent cap on the state’s tax on cigars, another bill introduced this week is seeking to raise that cap a bit.

SB 572, which was introduced on Thursday by Sen. Jim Ananich, D-27, seeks to increase that cap from 50 cents to 65 cents from Nov. 1, 2021 through Oct. 31, 2022, and then to 75 cents per cigar from Nov. 1, 2022 onward. It is part of a bill that seeks to establish a tax on e-cigarettes and other such products.

For consumers, that would mean that a cigar with an MSRP of $9.50 would go from currently costing $10.50 before any sales or other taxes are added, to $10.80 and then to $11. While it is a minor increase, it still prevents consumers from paying the full 32 percent tax rate that would be assessed without the cap, and which would make that same cigar with an MSRP of $9.50 cost $12.54.

The proposal comes as another bill, HB 4485, seeks to permanently extend the 50-cent cap, which has been in place since November 2012. The original cap came with a sunset date that has since been extended several times but is currently set to expire in November. That bill has already been approved by the House, which passed it in mid-May by a vote of 83-25, with two members not voting. Since being transmitted to the Senate, it was referred favorably by the Finance Committee and has been sitting with the Committee of the Whole since June 3.

Ananich’s bill has been referred to the Senate Committee on Regulatory Reform.